Game maker is cutting 35 jobs

EA Tiburon blames a lull in game sales

EA Tiburon, the Orlando studio known for its popular Madden NFL video-game series, said Wednesday it is eliminating about 35 jobs because of a lull in game sales.

Even as the studio announced it was trimming just less than 5 percent of its 746-person work force, it also said it was beginning to hire new programmers and developers with the technical skills to create games for next-generation systems like Microsoft's Xbox 360 and Sony's PlayStation 3.

Electronic Arts Tiburon, a unit of California-based Electronic Arts Inc., said its long-term expansion in Central Florida won't be affected by the layoffs.

"The industry transition from one console generation to the next has been more difficult than expected, but both EA and EA Tiburon expect to emerge in a stronger position, and our target for growth in Orlando remains the same."

Hagen declined to say how many additional hires the local operation would make as it awaits results from sales of new game consoles and games later in the year.

Xbox 360 was introduced in November, but sales were hampered by a shortage of consoles, and Sony's new system won't be out until later in the year, possibly by June, analysts said. As a result, game players have slowed their purchases of older-generation games while awaiting the arrival of the new systems and new-version games.

The layoffs didn't come as a surprise to former EA Tiburon executive Ben Noel, now executive director of the Florida Interactive Entertainment Academy, founded last year by the University of Central Florida to train game developers.

"This is a normal transition, like we went through in 2000 from PlayStation to PlayStation 2," Noel said.

"The market for new games isn't there in the short term, and development expenses are higher, but we expect in the next 24 months to get more critical mass in new titles and consoles. We think the interactive game market will continue to grow."

The layoffs also didn't fluster FIEA student David Verble, 23, of Ponte Vedra Beach, who enrolled last August when the newly created UCF academy was launched in downtown Orlando.

"I'm still very optimistic about the future of the video-game industry," he said. "By the time I graduate in another year, we should be at the sweet spot for hiring game developers for the next-generation consoles."

Similar optimism played out across town at Full Sail, where Eric Noteboom, director of education for digital arts, said the layoffs are a reflection of the entertainment business, including radio and film, among others.

"In all these areas, you have seasonal ups and downs," he said. "Game companies expand and contract.

"I'm sure this will be a topic of conversation among our students, but we know EA has had to reshuffle at other locations and laid off people, and it's still a very viable business."

EA Tiburon will introduce three new video-game titles in 2006. Arena FootballTM will be released next week, followed later by NFL Head Coach and Superman Returns: The Videogame -- the studio's first nonsports title, Hagen said.

Games, rather than game-playing consoles, are what drive industry profits, an analyst said.

"The video-game console is like the razor, while it's the games that are the razor blades and the real source of revenue," said Van Baker of Gartner.

"Sony and Microsoft make money off royalties from games they license, and the video-game publishers and developers make their profits off those sales, too, not from hardware itself."

The video-game business has been through a couple of previous hardware transitions, generally in five-year increments. Each time, sales have temporarily floundered during the transition and then expanded significantly after the new games and hardware take hold.

Still, there is no guarantee the industry will see the rapid expansion this time that occurred during the past five years during the transition from PlayStation to PlayStation 2 and Xbox, Baker said.

"EA and other developers have traditionally milked the market for existing big sellers, like Madden, but that doesn't attract new gamers," Baker said.

"That's still a significant source of revenue, but in order to expand the market, they need to change their business model so they're doing games that are easier and more approachable, and also will attract more females."